The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk page.(June 2014)

The process involves examining the currency that has been inserted, and by using various tests, determining if the currency is counterfeit. Since the parameters are different for each coin or bill, these detectors must be programmed for each item that they are to accept.

In operation, if the item is accepted it is retained by the machine and placed in a storage container for later collection. If the item is rejected, the machine returns the item. If a coin is rejected, it usually drops into a container for the customer to take back. If a bill is rejected, the machine pushes the bill out and the customer must remove it from the slot in which it was placed.

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Vending and change machines use not one, but several different techniques to check whether a bill is geniune. Toggling these settings and the sensitivity of each is programmed via means of dip switches on the internal circuitry.[citation needed]

Optical sensing with a small light detector called a photocell or a miniature digital camera is one of the main techniques that vending machines use. Bills are pixelated—that is, they are made out of small dots. The dots are spaced differently and have different sizes, depending on the bill. The optical sensors can look for these different patterns to determine what sort of bill is being inserted. Dollar bills are also fluorescent—when ultraviolet light is shined on them, they glow. Some machines shine an ultraviolet light on the bill and measure the glow to help determine just what they are looking at.

The particles in the ink on many countries' currency have ferromagnetic properties and at least some of the iron in the dollar bills is elemental.[1] Magnetic composition comprises carbon nanofoam in an amount of from 0.1 to 45 percent by weight of the total composition.[2]

Bills are passed over a permanent magnet array and magnetized along their direction of travel. A magnetic sensor located several inches away with its sensitive axis parallel to the direction of travel can detect the remnant field of the ink particles.

The purpose of the biasing magnet in this case is to achieve a controlled orientation of the magnetic moments of the ink particles, resulting in a maximum and recognizable magnetic signature. Reversing the magnetizing field can actually invert the signature.[3]

The thickness and dimensions of a bill are tested to ensure they are correct. US currency is 2.61 inches wide by 6.14 inches in length and are 0.0042 inches thick, and weight 1 gram.[4] Currency printed prior to 10 July 1929 had larger physical characteristics.[5] As the bills pass between the rollers, the voltages vary according to the thickness of the bills.[6]

Miniature transducers, approximately 3/8" diameter, offer high accuracy linear measurement in a compact space where size constraints prohibit the use of standard LVDTI's. In addition, the low- mass core is ideal for systems with low driving forces or high acceleration and, therefore, will not adversely influence the delicate nature of these applications. Operating ranges are available from ±0.005" to ±1.00", divided into eight intermediate strokes.[6]

Genuine FRNs have a clear polyester thread embedded vertically in the paper. The thread is inscribed with the denomination of the note, and is visible only when held up to light. Each denomination has a unique thread position and will glow a unique color in ultraviolet (UV) light.[7]

Also known as bill validators or bill acceptors, paper currency detectors scan paper currency using optical and magnetic sensors. Upon validation, the bill validator will inform the vending machine controller (VMC) or other host device of a credit via a parallel or serial interface. Various interfaces exist for the host device, including a single-line pulse interface, a multi-line parallel interface, a multi-line binary interface, and serial interfaces such as ccTalk, SSP, and MDB. Wrinkled or creased bills can cause these machines to reject them.

A dollar bill passing through the device. Note the pistons that grab the bill when it detects an insert.

There are currently only a handful of companies manufacturing this equipment. Crane Payment Innovations (joining Crane Payment Solutions and MEI), and Japan Cash Machine (JCM) are two of the largest, each maintaining dominance in a particular market segment. Other notable companies producing this type of equipment include Coinco, International Currency Technologies (ICT), Alpha CMS (Cash Management Solutions), Astrosystems, Money Controls, Pyramid Technologies, Validation Technologies International (VTI), Innovative Technology Ltd (ITL), Global Payment Technologies (GPT) and Jofemar. Recent innovations include remote auditing and reporting by these devices as part of an Automated Cash Handling network for amusement, banking, retail, casino and other industries.

The basic principle for coin detection is to test the physical properties of the coin against known characteristics of acceptable coins. The detector evaluates the coin based on its weight, size, and/or magnetism, and then sends an appropriate electrical signal via its output connection. The next step is generally performed by the bill-to-coins exchanger.

Today, sophisticated electronic coin acceptors are in use in some places that, in addition to validating weight and size, also scan the deposited coin using optics and match the image to a pre-defined list, or test the coin's "metallic signature" based on its alloy composition.

Normal coins pick up microscopic deposits from human fingers. When a coin acceptor is used long enough, thousands of coins rolling down a ramp will leave enough dirt to be visible. The acceptor requires periodic cleaning to prevent malfunctioning. Coin acceptors are modular, so a dirty acceptor can be replaced with a clean unit, preventing downtime. The old unit is then cleaned and refurbished.

Some new types of coin acceptors are able to recognize the coins through "training", so they will support any new types of coins or tokens when properly introduced.